Industries, Costs and Macroeconomic Regimes in Central and EasternEuropean Countries : Towards Stylised Facts”

Economists have difficulties to conceptualise and model the relationship betweenmacroeconomic policy and industry change. This paper explores the relationshipsbetween industry cost structures and macroeconomic regimes in central and eastEuropean countries (CEECs). It finds that the cost structures are more homogenouswithin industries than within countries. Changes in cost structures are dominantly intraindustry,i.e. unrelated to changes in industry structures though in some countriesstructural and specialisation effects are also significant. The paper links the intensity ofchanges in industry cost structures with a composite measure of macroeconomic stability.In the case of five CEECs, it finds that there is a country-specific relationship betweenchanges in costs and macroeconomic stability. Based on these findings the paper providesarguments for integration of macroeconomic and industrial (technology) policies....